To forecast the demand for the third quarter of this year using a three-quarter moving average, we’ll average the demand over the previous three quarters (using last year’s data and this year’s data available so far).

Here's how to calculate the moving average:

1. First Quarter Moving Average: $\text{(125 + 140 + 150) / 3} = 138.33$

2. Second Quarter Moving Average: $\text{(190 + 200 + 225) / 3} = 205$

3. Third Quarter Moving Average: $\text{(165 + 155 + 145) / 3} = 155$

4. Fourth Quarter Moving Average: $\text{(225 + 250 + 275) / 3} = 250$

Using these values, we now calculate the three-quarter moving average up to the third quarter of this year. We’ll average the first three quarters of the previous year to get the forecast for the third quarter of this year.

Three-Quarter Moving Average (for the Third Quarter of This Year)

Using last year's averages from Q1, Q2, and Q3: $\text{(138.33 + 205 + 155) / 3} = 166.11$

Forecasted demand for the third quarter of this year is approximately 166 units (rounded to the nearest whole number).

Would you like more details on any part of this calculation?

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Here are some related questions to deepen understanding:

1. How would the forecast change if we used a four-quarter moving average instead?
2. What if demand increases significantly in the second quarter—how would this impact the forecast for the third quarter?
3. How does using a weighted moving average differ from a simple moving average in forecasting?
4. Why might a three-quarter moving average be chosen over a two- or four-quarter moving average?
5. How could seasonality affect forecasts in quarterly data?

Tip: Always double-check which quarters are included in the moving average, as errors here can impact forecast accuracy.